Reduce Those Change Orders NOW

Construction projects are begun with the best intentions of avoiding any deviations from the plan. It’s tempting to go with the lowest contractor’s bid, however this runs the risk of hefty omissions—resulting in, you guessed it, those afflictive change orders. An industry consultant, Charles Thomsen, sums it up pretty fully: “Organizations want predictability. They set budgets and schedules, and change orders disrupt both of these.”

While sometimes variations are inevitable, other times you can avoid unnecessary change orders and client relationship blips with these suggestions.

Shared Communication:

Often (not always), change orders are a result of missed details. When there is consistent and clear communication across all teams involved in a project, problems are tackled early, allowing preparation in budgets when concerns are expressed. “The more brain power you have that understands what’s going to happen downstream, and the more eyes you have on something, the more apt you are to uncover future problems,” says Thomsen.

Formal Processes:

With a constant flow of information, the most effective means to addressing the steady need for detail confirmation is a structured system. Through a formalized procedure for addressing changes/potential problems, missed details are minimized and change orders are lightened. Being proactive through a defined process is a much better, and cheaper, alternative to being reactive.

Look Beyond the Obvious:

The overt labor/material costs of a project are indisputable, but there should also be consideration for the allowances not spelled out in architectural/MEP plans. The Nine Secrets of Estimating by Don L. Short, II, FCPE brings up that an estimator that can think critically would involve the impact of stipulations like testing, inspections and start-up activities along with the location of the work. Even with the additional consideration to specifications, a perfectly planned project is a rarity, but any additional consideration lends itself to more reliability in nailing down variable costs. Although no company has psychic estimating abilities (from my knowledge), all successful firms know one of the secrets to a successful project is having a reliable, detailed foundation.

Equip Estimates with Strong Equipment Costs:

Since equipment and material numbers are dependent on conditions of the project (what can fit on site, what is most compatible with other equipment), these estimates need to be catered to the specific requirements of the project. Expert estimators strive to find situations where efficiencies can be realized through potentially using one piece of equipment for multiple tasks. This should be approached with caution however, as equipment with over or under-sized volume can equate to higher costs and waste. With materials, the case isn’t much different—although timing is a bit more important. Material rates go up and down with price curves and delivery requirements adding complexity to the equation. Practice makes perfect to understand historical trends and forecast the wisest time to buy. A good rule of thumb is to be prepared for the worst to avoid budgetary surprises and change orders in a bind.